Published on August 27th, 2009 | by SayginYalcin0
Yahoo’s Purchase of Maktoob May Boost Arab Online Advertising
Aug. 27 (Bloomberg) — Yahoo! Inc.’s acquisition of Arabic-language Internet venture Maktoob.com Inc. is a further boost for a regional online advertising market that may increase as much as 40 percent this year.
The global recession has prompted companies in the Arab world to increase Internet advertising budgets at the expense of newspapers and television.
“A lot of people in the region had looked at the Internet as a failure, a fun thing to do,” Con O’Donnell, managing director of Sarmady Communications, said in a telephone interview yesterday. “When Yahoo and Vodafone throw money on the table it says that this is a serious business.”
Regional spending on Internet advertising is expected to grow 30 percent this year, according to Jawad Abassi, general manager of the Arab Advisers Group, a research company based in Amman, Jordan. Samih Toukan, chief executive officer of Maktoob Group, said he expects spending to increase as much as 40 percent.
Worldwide spending on online advertising declined by 5 percent in the second quarter to $13.9 billion due to the financial crisis, research group IDC said on Aug. 5. U.S. spending fell 7 percent, according to IDC.
The purchase of Maktoob, which was announced on Aug. 25, provides Yahoo with an entry point into a market that includes 22 countries and more than 300 million Arabic speakers. Maktoob is the largest portal in the Arab world with 16 million monthly users. Vodafone Egypt last year purchased Sarmady, a Cairo-based provider of digital content.
Growth has been propelled by the rising number of Internet users in the Arab world, where some 37 million people log on to the Internet, Abassi said.
“Internet penetration in the region is healthy now,” Toukan said in an Aug. 25 interview. “In Saudi Arabia it’s 30 percent. In Dubai it’s between 50 percent to 60 percent. The Internet’s reach is becoming formidable.”
Advertisers spent $190 million on the Internet in the Middle East in 2008, Abassi said. Spending in the region was $8 million to $10 million, the company said in a 2004 report on its Web site.
In Egypt, the most populous Arab country, rising internet usage will help Sarmady’s sales to jump 400 percent this year, O’Donnell said. He declined to provide figures.
Sarmady has attracted campaigns from new clients such as drug maker Novartis AG and Japanese carmaker Toyota Motor Corp. Visa Inc. is also advertising on the mobile phone application of Filgoal.com, Sarmady’s sports Web site.
“Our revenue will continue to spike,” O’Donnell said. “It will at least double every year” in the next five years, he added.
Yahoo, owner of the second most popular U.S. Internet search engine, said the transaction with Maktoob is set to be completed in the fourth quarter. Both sides declined to disclose the value of the deal.
Founded in 2000, the Amman-based Maktoob owns online auction, search, entertainment and matrimonial Web sites, and sells online payment cards.